DBS weighs on benchmark index

Singapore stocks finished lower on the first trading day of May, in line with most global equities, after the US Federal Reserve signalled it would remain on hold with monetary policy.

The Straits Times Index (STI) dipped yesterday by 0.2 per cent or 6.87 points, to 3,393.33.

Losers outpaced gainers 218 to 192, with over 878 million shares worth $1.11 billion changing hands.

Market observers had speculated the US Federal Reserve might cut rates. But the central bank shot down such expectations on Wednesday when it held interest rates steady and hinted that it was not considering a cut currently.

"Equity markets were looking for so much more from the Fed and were shocked when chair Powell said the Fed did not see a convincing case to move rates in either direction," said Mr Stephen Innes, managing partner and head of trading at SPI Asset Management.

Reports emerged that a US-China trade deal could be announced as early as next Friday but it did not seem to inspire risk-on sentiment.

"We suspect a sizeable chunk of trade deal risk boost is already baked in," Mr Innes said.

Singapore stocks opened lower yesterday and failed to recover, with DBS Group Holdings weighing on the benchmark. South-east Asia's largest lender took a 2.3 per cent slide to $27.60. But its peers saw slight gains, with OCBC Bank up 0.33 per cent at $12.14 and United Overseas Bank up 0.07 per cent at $27.85.

OCBC Investment Research downgraded its call on DBS to "hold" on Tuesday, with a fair value of $29.18, after its shares rose on the back of better-than-expected first-quarter earnings. Head of research Carmen Lee had said the shares were trading close to the research house's fair value for the counter and suggested investors can consider buying shares if DBS's stock price hits $27.50 or lower.

Among STI constituents that declined, conglomerate Jardine Cycle & Carriage (C&C) lost 2.11 per cent to $34.77 and Jardine Matheson Holdings fell 1.06 per cent to US$65.10 (S$89).

On Tuesday, DBS Equity Research published a report with a "buy" call and a $39.10 target price on Jardine C&C, citing more attractive valuations.

DBS analyst Lim Rui Wen wrote: "We like Jardine C&C for its diversified earnings growth across the region, on top of its strategic 50.1 per cent interest in (Indonesia-based automotive group) Astra International.

"We remain positive on Indonesia's longer-term outlook, and (Jardine C&C) represents an inexpensive entry into Astra International."

Other counters that lost ground yesterday included seafood restaurant operator No Signboard, which fell 2.35 per cent to $0.083. It said its chief executive officer Sam Lim Yong Sim was arrested on Tuesday and released on bail.

Contract manufacturer Hi-P International's shares dipped 2.06 per cent to $1.43 before it announced first-quarter results, which saw gross profit take a hit from pricing pressures and product mix.

Hi-P has guided for lower revenue but flattish earnings in the second quarter, and a full-year performance largely unchanged from the previous year's.

Shares of Delong Holdings fell 1.8 per cent to $6, after the Chinese steelmaker said it expects to report a lower first-quarter net profit mainly due to a decrease in the average selling prices of products and higher cost of sales for every tonne.

For full listings of SGX prices, go to https://www2.sgx.com